How GM Makes $1 Billion A Year By Recycling Waste

Metal scraps headed for recycling at GM plant (Photo by Jeffrey Sauger for General Motors)

If one man's trash is another man's treasure, General Motors has the revenue to prove it.

The automaker generates an eye-popping $1 billion a year reusing or recycling materials that would otherwise be thrown away -- everything from scrap steel and paint sludge to cardboard boxes and worn-out tires. It's an unexpected but welcome revenue stream that comes from rethinking its approach to waste reduction.

Manufacturing is a dirty business. Industrial facilities in the United States generate 7.6 billion tons of nonhazardous waste annually, according the Environmental Protection Agency. Most of it ends up in landfills.

At GM, however, waste is viewed not as something to be thrown away, but as a resource out of place. By finding new uses for that waste -- or selling it to someone who can -- GM diverted 2.5 million metric tons of waste from landfills in 2011 (the equivalent of 38 million garbage bags).

When an automaker's stamping press cuts the shape of a car door out of a flat sheet of steel, for example, there's a large hole reserved for the window. In most auto factories, the leftover steel cutouts are stacked up, then sold to a foundry, where they are melted with other bits of steel and converted into scrap metal. That's one way to recycle, but the melting and reprocessing of steel costs money and consumes a lot of energy.

General Motors sees those leftover steel cutouts, roughly four feet square, as a marketable commodity. It sells them directly to a local steel fabricator, Blue Star Steel, which uses them to stamp out small brackets for heating and air conditioning equipment for other industries, skipping the foundry altogether. Everyone benefits: GM maximizes the value of that leftover material; Blue Star Steel saves money buying scrap steel, and the environment is spared additional greenhouse gas emissions from a foundry.

Worldwide, 90 percent of GM's manufacturing waste is reused or recycled this way -- more than any other automaker, according to Two Tomorrows, a sustainability consultant in San Francisco. GM has a total of 104 landfill-free facilities worldwide, including 84 manufacturing sites that reuse or recycle 97 percent of their waste, and convert the remainder to energy. Its goal is 125 landfill-free facilities globally by 2020.

Aside from the environmental benefits, GM argues there's a strong business case for zero-waste manufacturing, which is why it's spreading the gospel of recycling and re-use to other companies and other industries. It even published a downloadable blueprint that explains its process for landfill-free manufacturing.

"Sustainability is a word that's used often," said John Bradburn, GM's manager of waste-reduction efforts. "But what’s really important, if a company's going to do it, is that they need to not just take care of the environmental aspects by reducing their footprint, but the financial aspects as well, by making sure that work contributes to the bottom line," he said.

A project that doesn't seem cost-effective might become so if the company rethinks it using recycled materials or by finding a partner like Blue Star Steel willing to pay for excess materials. "Our output can become someone else's input," said Bradburn, a self-described "modern tree hugger" and 35-year GM veteran. "It really opened people’s eyes – even within our company."

Of course, there is some cost involved in improving waste management. “A landfill-free program requires investment,” said Mike Robinson, GM vice president of sustainability and global regulatory affairs. GM, for example, had to hire resource management employees in each facility to track and report waste generation for their site. “It’s important to be patient as those upfront costs decrease in time, and recycling revenues will help offset them," Robinson said.

When GM started its commitment to landfill free manufacturing in 2005, it invested about $10 for every 1 ton of waste reduced. Over time, it reduced program costs by 92 percent and total waste by 62 percent.

GM officials say the key to recovering the highest value from manufacturing waste is managing all byproducts in one electronic tracking system. All GM plants monitor, measure and centrally report their performance on a monthly basis where it is evaluated against company-wide waste-reduction goals. By engaging employees in the recycling effort, the data also helps motivate factories to keep looking for creative solutions. If one plant finds a valuable use for a byproduct, it is quickly shared with other factories around the world.

GM also built a strong network of suppliers committed to working on "closed-loop" systems that recycle factory waste into new vehicle parts or plant supplies. For example:

Cardboard shipping materials from various GM plants are recycled into sound-dampening material in the headliners of the Buick Lacrosse and Verano to help keep the cabin quiet.

Plastic caps and shipping aids from GM's plant in Fort Wayne, Ind., are mixed with other materials to make radiator shrouds for the Chevrolet Silverado and GMC Sierra pickups built there.

Plastic transmission case caps are collected for recycling (Photo by Jeffrey Sauger for General Motors)

Test tires from GM's Milford, Mich., proving ground are shredded and used in the manufacturing of air and water baffles for a variety of GM vehicles.

Wooden pallets that can no longer be used in the factory are instead used for housing construction.